Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How ITC works
GST on purchases reduces the GST you pay on sales, so you’re taxed only on the value you add.
Conditions to claim
Valid invoice, the credit appears in GSTR-2B (supplier filed), goods/services received, and payment to the supplier within 180 days. Claim within the time limit (by 30 November of the next year).
The four conditions and the timing limit
Four conditions must all be met to claim input credit: you hold a valid tax invoice or debit note; the goods or services have actually been received; the credit appears in your GSTR-2B because the supplier reported it in their GSTR-1; and the tax has reached the government. Beyond these four, you must pay the supplier within 180 days of the invoice — miss it and the credit already claimed is reversed (with interest) until you pay. There’s also a hard time limit: credit for a financial year can be claimed only up to 30 November of the following year, or the date of the annual return, whichever is earlier — after that it lapses. Credit is set off in a prescribed order across IGST, CGST and SGST, and some credits are blocked outright under Section 17(5) regardless of these conditions. The disciplined approach is to claim strictly from the 2B each month, chase suppliers whose invoices are missing before the cut-off, track the 180-day payment clock on vendor dues, and never carry an unreconciled credit into the annual return. Good vendor and payment records are what protect the credit.